SINGAPORE, May 7: Two Singapore banks on Wednesday reported falls in first-quarter net profit as trading activities took a hit from global financial turmoil.

DBS Group, Southeast Asia’s biggest bank, said its net profit in the first quarter ended March 31 dipped 2.0 per cent to 603 million Singapore dollars compared with the previous year.

Singapore’s smallest bank, Oversea-Chinese Banking Corp (OCBC), reported a four per cent fall in net profit to 622 million dollars for the first quarter.

DBS said its revenue totalled 1.56 billion dollars, up 1.0 per cent from the same period last year, but it reported a trading loss of 161 million dollars, compared with a 171-million-dollar net profit the year before, amid a global credit crunch triggered by a crisis in the US housing market.

Income from fees rose 14 per cent over the previous year, but was down 7.0 per cent from the preceding quarter “due to weaker capital market activities such as wealth management, investment banking and stockbroking,” added DBS, which has operations in 16 Asian markets including Hong Kong.

“The results were not bad,” David Lum, an analyst at Daiwa Institute of Research, said of DBS.

OCBC said its net interest income rose by 26 per cent to 638 million dollars, boosted by loan volumes and improved interest margins.

“However, volatile financial markets resulted in overall non-interest income falling by 26 per cent” to 377 million dollars, OCBC said, citing a decline in life assurance profits and losses in securities and derivatives trading along with lower gains on investment securities.

“The first quarter 2008 loss included a 16 million dollar mark-to-market loss on credit default swaps related to the bank’s corporate CDO investments,” it said, referring to collateralised debt obligations. Despite the 16-million-dollar loss, the bank’s corporate CDO investment portfolio of 344 million dollars continues to perform, it said.

OCBC added that its asset-backed securities CDO portfolio of 250 million dollars, written down by 85 per cent in 2007, did not require further allowances in the first quarter.

CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.

World financial markets have been battered since last August by fallout from a crisis in the US subprime, or high-risk, loan sector which forced commercial banks to tighten lending criteria leading to a credit crunch which spread to threaten the global economy.—AFP